Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
Stock Code: 002714 Stock Abbreviation: Muyuan Foods Announcement No.: 2023-046
Bond Code: 127045 Bond Abbreviation: Muyuan Convertible Bond
Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
I ．Important Notes
This summary is abstracted from the 2022 Annual Report of Muyuan Foods Co., Ltd..
Investors may refer to the full text of the report through the media designated by the China
Securities Regulatory Commission (CSRC) for further details of the business performance,
financial situation and future development plans of Muyuan Foods Co., Ltd. (hereinafter referred
to as “the Company").
This summary has been prepared in both Chinese and English. Should there be any
discrepancies or misunderstandings between the two versions, the Chinese version shall prevail.
All directors attended the board meeting on which this report was reviewed.
Notes of non-standard audit opinions
□ Applicable Not Applicable
Preliminary plan for profit distribution or capitalization of reserves in the reporting period as
reviewed by the board
Applicable □ Not Applicable
Capitalization of reserves or not
□ Yes No
The preliminary plan for profit distribution, as approved by the Company’s board of
directors, decides to distribute a cash dividend of CNY 7.36 (tax included) for every 10 shares to
all shareholders, on the basis of the total share capital on the record date for the distribution, with
0 bonus shares (tax included) and no capitalization of reserves.
Profit distribution plan of preferred shares during the reporting period as approved through the
resolution of the board of directors
Applicable □ Not Applicable
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
Distribution Involved in
Distribution Dividend Dividend
Dividend conditions and the allocation
Distribution date Amount (CNY) payment accumulated
Rate relevant procedures of residual
(tax included) method or not
satisfied or not profits or not
December 26, 2022 6.8% 168,363,240.00 Yes Cash No No
II. Basic Information of the Company
1. Company Profile
Stock abbreviation Muyuan Foods Stock code 002714
Stock Exchange for stock listing Shenzhen Stock Exchange
Stock abbreviation before change (if
None
any)
Contact information Secretary of the Board Securities Affairs Representative
Name Qin Jun Cao Fang
Longsheng Industrial Park, Wolong Longsheng Industrial Park, Wolong
Office Address District, Nanyang City, Henan Province, District, Nanyang City, Henan Province,
China China
Fax 0377-66100053 0377-66100053
Telephone 0377-65239559 0377-65239559
E-Mail myzqb@muyuanfoods.com myzqb@muyuanfoods.com
2. Introduction of Main Businesses or Products during the Reporting Period
(I) Summary of the Company’s operation
In 2022, the Company sold 61.201 million heads of pigs, including 55.296 million heads of
finished pigs (of which, 7.368 million heads were sold to the wholly-owned subsidiary Muyuan
Meat Co., Ltd. and its subsidiaries), 5.558 million heads of piglets, and 346 thousand heads of
breeding pigs. In 2022, 7.362 million heads of pigs were slaughtered and 757 thousand tons of
fresh and frozen pork products were sold.
As a result, the Company achieved an operating revenue of CNY 124.826 billion in 2022, a
YOY increase of 58.23%. Of which, the revenue attributable to slaughter and meat processing is
CNY 14.718 billion, a YOY increase of 171.66%. The net profit is CNY 14.933 billion, a YOY
increase of 95.50%.
In 2022, the Company continued to increase investment in the on-site management of farms,
technology R&D and innovation, and achieved significant results in pig health management and
disease elimination. The Company's production indicators improved significantly compared to
2021 and the annual pig farming costs showed a continuous downward trend. In 2022, the
Company’s annual average full cost of finished pigs was around CNY 15.7/kg and the full cost in
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
the fourth quarter was reduced to less than CNY 15.5/kg. Without considering the impact of raised
raw grain prices on costs, the Company had basically realized its annual goal of lowering costs.
The year 2022 witnessed the Company’s further transformation from high-speed
development to high-quality and stable development. It continuously promoted the construction
of supporting facilities for pig farms, improved the infrastructures for biosecurity, and
strengthened the cost-control ability of pig farming. It also expanded to the upstream and
downstream of the industrial chain. Subsidiaries of grain trading companies were established to
serve the purpose of lowering purchase costs. And slaughter business was distributed to match the
established pig production capacity for providing more high-quality pork foods to the public. As
of the end of 2022, the Company has 288 wholly-owned and holding subsidiaries, which are
distributed in 24 provincial-level administrative regions across China.
Besides, to enhance the industrial chain linkage and reduce purchase costs, during the
reporting period, the Company co-founded the CAHIC-Muyuan (Henan) Biopharmaceutical Co.,
Ltd (“中牧牧原（河南）生物药业有限公司”) with the China Animal Husbandry Industry Co.,
Ltd. (CAHIC) (“中牧实业股份有限公司”) and CAHIC Nanjing Animal Pharmaceutical Co., Ltd.
(“中牧南京动物药业有限公司”) and co-founded the Henan Lianmu Veterinary Medicine Co.,
Ltd (“ 河 南 联 牧 兽 药 有 限 公 司 ”) with the United Laboratories (Inner Mongolia) Animal
Healthcare Co., Ltd. (“内蒙古联邦动保药品有限公司”).
2022 is the second year for China to fully promote the Dual-carbon Strategy. To promote
green development in the industry by further energy conservation, emission reduction, low-carbon
production, and improvement in utilization efficiency of raw materials, the Company established
companies based on its businesses of pig farming, slaughter, and meat processing, namely Henan
Muyuan Ecological Environment Technology Co., Ltd.(“河南牧原生态环境科技有限公司”),
Henan Muyuan Synthetic Biotechnology Co., Ltd. (“河南牧原合成生物技术有限公司”), and
Henan Muyuan New Energy Industry Development Co., Ltd. (“河南牧原新能源产业发展有限
公司”).
In 2022, to build a talent team that is younger, internationalized, and more professional, the
HR Department of the Company carried out various activities to attract talent from colleges
domestically and actively managed several overseas special recruitment activities for international
students. It established well an assessment mechanism to select and use talents, a talent pool
cultivation mechanism to empower talents precisely and improve their professional competence
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
and qualities continuously, and a performance-based pay mechanism and personnel administration
mechanism to make employees clear about their promotion channels. By doing so, it aims to give
the right people full play in the right positions and meet the talent needs during the Company's
high-quality development.
(II) Main businesses, products and their uses
The Company’s main businesses are the farming, sales, and slaughter of pigs. Its main
products include finished pigs, piglets, and breeding pigs, as well as pork products such as pork
carcasses and finely cut pork. As of the end of 2022, the Company has a pig farming capacity of
about 75 million heads per year and has put 10 slaughter plants into operation, with a designed
slaughter capacity of 29 million heads of pigs per year.
(III) Business model
The Company adopts a vertically integrated business model and has formed a pork industrial
chain, integrating feed processing, pig breeding, pig finishing, pig slaughtering, and meat
processing, that covers the whole pig industrial value chain. The vertically integrated business
model is helpful for the Company to carry out more strict control of costs and quality and ensure
business results in an all-round way.
The Company builds its own feed mills to independently develop nutrition formulas and
produce feeds to meet the feeding needs of all-stage pigs. To control the feeding costs effectively,
feed formulas would change timely in accordance with the changes in the raw grain market and
low-protein diet technology has been applied to reduce the usage of soybean meals.
The Company adopts the two-breed rotational crossbreeding system to select continuously
and independently and build its own nucleus herds. It, therefore, depends on no breeding pigs
purchased from external sources and makes the production costs and disease risks reduced. At the
same time, the Company’s breeding pigs can satisfy both breeding use and finishing use in terms
of reproductive performance, growth rate, lean meat percentage, and carcass quality, which lays a
foundation for the rapid development of the Company.
The Company adheres to R&D innovations and the application of smart equipment. It has
independently developed the fresh air filtration system, independent ventilation system, intelligent
environment control system, intelligent feeding system, etc. A series of intelligent equipment
operate in a collaborative manner. It aims to improve pig farming efficiency, lower pig farming
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
costs, and promote the transformation and upgrading of the industry through technology-led and
innovation-driven development.
In 2022, the Company continued to build supporting slaughter capacity in the regions where
the Company carries out large-scale pig farming. Based on the business model of independent pig
farming and slaughter, the Company made the whole production process transparent, controllable
and traceable, so as to ensure food quality and safety and provide consumers with more high-
quality pork products.
As of the end of 2022, the Company had set up 25 slaughter subsidiaries across China, with
all slaughtered pigs from its own farms. The Company further expanded its pork sales network in
China. It had set up more than 60 service stations for slaughter and meat business in 20 province-
level regions across China as of the end of 2022, providing services to over 13,000 clients from
agricultural product wholesale and distribution, supermarket chains, chain catering, food
processing and new retail.
(IV) Industry development
1. Overview of China’s pig industry
Data from the National Bureau of Statistics of China (NBSC) show that 699.95 million heads
of pigs were marketed in China in 2022, an increase of 4.27% over the previous year. As of the
end of 2022, the inventory of reproductive sows and live pigs is 43.90 million and 452.56 million,
an increase of 1.41% and 0.74% over the previous year, respectively.
China’s Pig Output (10 thousand heads)
(2018-2022)
80,000 67,128 30.00%
69,382 69,995
70,000
20.00%
60,000 54,419 52,704
10.00%
50,000
40,000 0.00%
30,000
-10.00%
20,000
-20.00%
10,000
0 -30.00%
2018 2019 2020 2021 2022
Pig Output YOY Change %
(Data source: NBSC)
China is the largest pork producer in the world. According to data released by the U.S.
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
Department of Agriculture (USDA), China's pork production in 2022 accounted for 48.36% of
global production, an obvious increase over the previous two years.
Proportion of China’s Pork Production in the Global
Production
(2018-2022)
60.00%
48.28% 48.36%
50.00% 44.09%
42.12%
37.95%
40.00%
30.00%
20.00%
10.00%
0.00%
2018年 2019年 2020年 2021年 2022年
(Data source: USDA)
China is also the largest pork consumption country in the world. According to data released
by USDA, China's pork consumption accounts for about 51% of the world's in 2022, and China's
per capita pork consumption is about twice the world's.
So, Pork is the most important component of meat consumption among Chinese residents.
According to NBSC, China's pork production in 2022 was 55.41 million tons, accounting for
60.05% of the meat production of main livestock and poultry.
Proportion of Pork Production in China’s Meat
Production of Main Livestock and Poultry
(2018-2022)
66.00%
63.45%
64.00%
62.00% 60.05%
59.59%
60.00%
58.00%
55.63%
56.00%
53.84%
54.00%
52.00%
50.00%
48.00%
2018 2019 2020 2021 2022
(Data source: NBSC)
2. Pig price trend
China’s pig market is characterized by significant cyclicity. In the cycle from 2019 to 2022,
due to the superimposed effects of factors including African Swine Fever (ASF), the number of
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
live pigs for market dropped in 2019, and the pig price turned to high from a low position at the
beginning. The annual average price increased significantly year-on-year. In 2020, the industry's
production capacity showed a gradual recovery trend, but due to the large reduction in the early
stage, live pigs were still in short supply, and the price of live pigs was generally maintained at a
high level. In 2021, the industry's production capacity basically recovered, the market supply
rebounded significantly, and the price of live pigs showed a downward trend. In 2022, the
production capacity of the industry fully recovered. The pig price turned to high from a low
position at the beginning of the year, with a large fluctuation.
Average Price of Live Pigs in China from 2019 to 2022
(CNY/kg)
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2019-01-02
2019-02-20
2019-04-10
2019-05-29
2019-07-17
2019-09-04
2019-10-23
2019-12-11
2020-02-05
2020-03-25
2020-05-13
2020-07-01
2020-08-19
2020-12-02
2021-01-20
2021-03-10
2021-04-28
2021-06-16
2021-08-04
2021-09-22
2021-11-10
2021-12-29
2022-02-16
2022-04-06
2022-05-25
2022-07-13
2022-08-31
2022-10-19
2022-12-07
2020-10-14
(Data source: MARA, China)
3. Continuously improved pig farming scale
China’s pig farming industry has long been dominated by scatter feeding production, with a
low industry concentration. There are a large number of backyard households and small- and
medium-sized farms. According to the statistics of the China Animal Husbandry and Veterinary
Yearbook, there were 554 farms/households with an annual production of more than 50,000 live
pigs for market in 2020, accounting for only 0.0027% of the total number of farms/households,
which increased a little bit but is still a very low proportion.
In recent years, affected by factors such as the tightening of environmental protection
policies, scarcity of pig farming land, frequent outbreaks of African Swine Fever and other
epidemics, drastic fluctuations in pig prices, and accelerated improvement of food safety, the
backyard households have withdrawn significantly, further accelerating the process of
standardization, scale and modernization of pig farming in China. According to industry bodies,
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
China’s top 10 pig farming companies sold 141.92 million heads of pigs in total in 2022,
accounting for 20.28% of the total output in China, an increase over 2021. The concentration of
China's pig farming industry has shown a continuous upward trend in recent years, but the overall
level of large-scale production in the industry remains relatively low compared with other
countries with more mature industrial development.
3. Main accounting data and financial indicators
(1) Main accounting data and financial indicators in the past three years
Whether the Company needs to make retroactive adjustments or restate the accounting data of
previous years or not
□ Yes No
Unit : CNY
End of 2022 End of 2021 YOY change End of 2020
Total assets 192,947,611,799.00 177,265,759,187.58 8.85% 122,627,256,969.07
Net assets attributable
to shareholders of the 71,783,350,329.31 54,351,768,519.36 32.07% 50,406,879,150.81
Company
2022 2021 YOY change 2020
Operating revenue 124,826,212,177.74 78,889,870,566.40 58.23% 56,277,065,607.85
Net profits attributable
to shareholders of the 13,266,156,512.39 6,903,777,691.92 92.16% 27,451,421,940.73
Company
Net profits attributable
to shareholders of the
Company after 13,029,323,049.56 6,785,021,475.69 92.03% 27,326,977,374.14
deduction of non-
recurring profit or loss
Net cash flow from
23,010,550,801.93 16,295,026,813.82 41.21% 23,185,751,195.99
operations
Basic EPS
2.49 1.28 94.53% 5.33
(CNY/share)
Diluted EPS
2.45 1.28 91.41% 5.28
(CNY/share)
8.10 percentage points
Weighted average ROE 21.01% 12.91% 74.43%
up
(2) Main accounting data by quarter
Unit : CNY
First quarter Second quarter Third quarter Fourth quarter
Operating revenue 18,277,656,240.56 25,989,992,497.48 36,505,891,324.79 44,052,672,114.91
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
Net profits attributable
to shareholders of the -5,180,230,377.25 -1,503,365,518.96 8,195,894,873.60 11,753,857,535.00
Company
Net profits attributable
to shareholders of the
Company after -5,240,714,569.53 -1,629,883,347.28 8,170,525,359.31 11,729,395,607.06
deduction of non-
recurring profit or loss
Net cash flow from
-58,213,007.43 248,631,593.59 9,669,009,021.89 13,151,123,193.88
operations
Whether the above financial indicators or their total amount are significantly different from the
related financial indicators disclosed in the Company's quarterly or semi-annual reports.
□ Yes No
4. Share Capital and Shareholders
(1) The number of common shareholders and preferred shareholders with resumed voting
rights and the shareholding of the top 10 shareholders
Unit: share
Total number
Total
of common Total number of Total number of
number of
shareholders preferred preferred shareholders
common
at the end of shareholders with with resumed voting
shareholder
273,151 the month 280,808 resumed voting 0 rights at the end of the 0
s at the end
before the rights at the end month before the
of the
disclosure of the reporting disclosure date of the
reporting
date of the period annual report
period
annual report
Shareholding of the top 10 shareholders
Pledged, marked or frozen
Number of shares
Shareholder Shareholdin Number of
Shareholder name restricted shares
nature g percentage shares held Share
held Quantity
status
Domestic
Qin Yinglin 38.12% 2,086,287,906 1,564,715,929 Pledged 293,258,000
natural person
Domestic non-
Muyuan Industrial
state-owned 15.26% 834,925,406 150,112,584 Pledged 243,727,400
Group Co., Ltd.
corporation
Hong Kong Securities
Overseas
Clearing Company Ltd. 2.94% 161,071,025
corporation
(HKSCC)
Domestic
Qian Ying 1.18% 64,445,240 48,333,929
natural person
Domestic
Sun Huigang 1.14% 62,443,706
natural person
Muyuan Foods Co., Ltd.
– Phase II Employee Other 1.03% 56,443,800
Stock Ownership Plan
China Securities Co., State-owned
0.70% 38,254,883
Ltd. corporation
Hainan Hongbao Domestic non- 0.69% 37,510,929
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
Investment Co., Ltd. state-owned
corporation
Domestic
Li Yanyan 0.61% 33,392,930
natural person
Domestic
Cai Min 0.55% 29,967,793
natural person
Description of affiliated Mr. Qin Yinglin and Mrs. Qian Ying are the actual controllers of the Company. Mr. Qin Yinglin and
relations or concerted Mrs. Qian Ying jointly hold 100% equity of Muyuan Group and hold 54.56% equity of the Company
actions among the above directly and indirectly.
shareholders It is unknown whether other shareholders have affiliated relations or act in concert.
Sun Huigang holds 9,129,100 shares of the Company through his common securities account, and
53,314,606 shares through his collateral securities account for margin trading, representing a total
holding of 62,443,706 shares.
Hainan Hongbao Investment Co., Ltd. holds 7,865,669 shares of the Company through its common
Description securities account and 29,645,260 shares through its collateral securities account for margin trading,
ofshareholders representing a total holding of 37,510,929 shares.
participating in Securities Li Yanyan holds 5,207,990 shares of the Company through her common securities account, and
Margin Trading (if any) 28,184,940 shares through her collateral securities account for margin trading, representing a total
holding of 33,392,930 shares.
Cai Min holds 2,068,500 shares of the Company through her common securities account, and
27,899,293 shares through her collateral securities account for margin trading, representing a total
holding of 29,967,793 shares.
(2) Total number of preferred shareholders and the shareholdings of the top 10 preferred
shareholders of the Company
□ Applicable Not Applicable
There were no preferred shareholders holding shares of the Company during the reporting period.
(3) Ownership and control relations between the Company and the actual controllers
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
5 Bonds in existence as of the approval date of the annual report
Applicable □ Not Applicable
(1) Basic information of bonds
Bond
Bond Balance
Bond Name Bond Code Issue Date Due Date Interest Rate
Abbreviation (CNY
10,000)
Convertible
Muyuan
Bond of
Convertible 127045 August 16, 2021 August 15, 2027 954,390.91 0.20%
Muyuan Foods
Bond
Co., Ltd.
Interest payment and cashing of Muyuan Convertible Bond paid the first-year interest at par on August 16, 2022 for the period
corporate bonds during the from August 16, 2021 to August 15, 2022, with a coupon rate of 0.20% and the interest was
reporting period CNY 2 (tax included) for every 10 Muyuan Convertible Bonds (par value CNY 1,000).
(2) Latest tracking bond ratings and changes
During the reporting period, China Chengxin International Credit Rating Co., Ltd. (CCXI)
issued the 2022 Tracking and Rating Report on the Public Issuance of Convertible Bonds by
Muyuan Foods Co., Ltd. on June 28, 2022. It decided to maintain the Company's AA+ main credit
rating, adjust the rating outlook to negative, and maintain the AA+ credit rating of "Muyuan
Convertible Bond". Please refer to the relevant announcements on the website of CNINFO on
June 29, 2022, for details.
(3) Main accounting data and financial indicators in the past two years as of the end of the
reporting period
Unit: CNY 10,000
Item 2022 2021 YOY change
Liabilities to assets ratio 54.36% 61.30% -6.94%
Net profit after deduction of
1,302,932.3 678,502.15 92.03%
non-recurring profit or loss
EBITDA/Total Debt ratio 44.02% 28.97% 15.05%
Interest coverage ratio 6.12 4.37 40.05%
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
III. Significant Events
(1) During the 32nd Meeting of the Third Board of Directors held on December 8, 2020, the
Company deliberated and approved the Proposal on the Establishment of a Jointly Funded
Financial Company by Muyuan Foods Co., Ltd. and Muyuan Industrial Group Co., Ltd. and on
Related-Party Transactions. The Company and Muyuan Group plan to jointly fund a financial
company. The registered capital of the financial company is CNY 1 billion, which shall be funded
in cash by Muyuan Group and the Company as sponsors, with CNY 450 million from the
Company.
As of the report release date, the matter is still under preparation and application.
(2) The Company held the 15th Meeting of the Fourth Board of Directors on December 12,
2022 and the 3rd Extraordinary General Meeting of 2022 on December 28, 2022, during which
the Proposal on the Issuance of GDRs and Listing on the SIX Swiss Exchange and Transforming
into an Overseas-Offering Limited Company and other related proposals were approved. It was
agreed the Company issue GDRs on the SIX Swiss Exchange; the new underlying A shares
represented by the GDRs issued shall not exceed 250 million shares, including the securities
issued upon the exercise of any over-allotment option (if any), and shall not exceed 4.37% of the
total ordinary share capital of the Company upon completion of the issuance.
As of the date of this report, the Company has been granted conditional approval from the
SIX Exchange Regulation AG for issuing GDRs and listing on the SIX Swiss Exchange. The SIX
Swiss Exchange Regulation AG has agreed to list the GDRs issued by the Company, subject to
the satisfaction of customary conditions, on the SIX Swiss Exchange. For the issuance and listing,
the approval of the China Securities Regulatory Commission (CSRC) is required. And several
prerequisites, including but not limited to the approval of the Prospectus Office of the SIX Swiss
Exchange Regulation AG on the Company’s prospectus and the final confirmation of the listing
timing by the SIX Swiss Exchange, still need to be satisfied. These matters are subject to certain
uncertainties.
In addition to the above matters, the Company is not required to disclose other significant
matters.
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Summary of 2022 Annual Report of Muyuan Foods Co., Ltd.
Muyuan Foods Co., Ltd.
Chairman: Qin Yinglin
April 26, 2023
13
